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Outline, using appropriate figures, how the Irish economy has performed, in the past twelve months, in each of the following areas: (i) Price levels; (ii) Economic growth; (iii) Government current budgetary position; (iv) Employment/unemployment. - Leaving Cert Economics - Question 8 (a) - 2010
Question 8 (a)
Outline, using appropriate figures, how the Irish economy has performed, in the past twelve months, in each of the following areas: (i) Price levels; (ii) Economic ... show full transcript
Worked Solution & Example Answer:Outline, using appropriate figures, how the Irish economy has performed, in the past twelve months, in each of the following areas: (i) Price levels; (ii) Economic growth; (iii) Government current budgetary position; (iv) Employment/unemployment. - Leaving Cert Economics - Question 8 (a) - 2010
Step 1
Price levels
Answer
In the past twelve months, price levels in Ireland have shown a tendency to decline as deflation rates have reached their lowest in over a year. Notably, prices have fallen due to a reduction in foreign demand and domestic factors. The most significant price drops have occurred in the clothing, footwear, and non-alcoholic beverage sectors, among others. Transport costs for housing, water, electricity, gas, and other fuels have also seen reductions, averaging a decline of about 1.1% compared to May 2010. The rate of deflation peaked at 6.6% in October 2009, with a gradual decrease to current rates.
Step 2
Economic growth
Answer
The Irish economy faced a downturn with a significant contraction indicated by a 7.2% decrease in Gross Domestic Product (GDP) in 2009. Forecasts suggest a modest recovery with an estimated growth of just 1.1% in 2010 according to the Economic and Social Research Institute (ESRI). Additionally, Irish Gross National Product (GNP) has decreased by approximately 12%, highlighting ongoing challenges as the economy transitions. Analysts predict mild growth attributed to gradual recovery from economic recession.
Step 3
Government current budgetary position
Answer
The government's budgetary position has deteriorated due to economic challenges, prompting substantial cuts in government expenditures since December 2009. Initially, the budget deficit was projected at €11.4 billion, which later increased to about €13.6 billion for 2010. The economic budgetary review (EBR) showed a decline from €24.7 billion in 2009 to an expected €18.6 billion in 2010. The EBR aims to adhere to the 3% deficit agreed upon in Eurozone commitments while considering a four-year plan to manage finances effectively.
Step 4
Employment/unemployment
Answer
The unemployment rate in Ireland has been significantly affected, with an increase of people registering on the Live Register by 6,600 in May, according to Central Statistics Office reports. In May 2010, the total number of individuals on the Live Register rose to 439,100. The unemployment rate reached 13.1%, which is higher than the overall EU average, contributing to an expected continuation of poor employment prospects and economic conditions.